financial analysis -vw
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FINANCIAL ANALYSIS
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FINANCIAL ANALYSIS
VOLKSWAGON AG.
SID# 1546886/1
WORD COUNT: 2250
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Table of Contents
COMPANY OVRVIW.................................................................................................1
PART A........................................................................................................................ 2
VNTS IMPACTING VW FROM T! PRIOD 2010 TO 2014...........................................2
Events of 2010............................................................................................................. 2
Events of 2011............................................................................................................. 2
Events of 2012............................................................................................................. 3
Events of 2013............................................................................................................. 3
Events of 2014............................................................................................................. 4
PART "........................................................................................................................ 5
IMPACT OF VNTS ON FINANCIAL STATMNTS.......................................................5
Impact on VW Financials - 2010.......................................................................................5
Sales/Revenue..........................................................................................................5
Share rice.............................................................................................................. 5
Impact on VW Financials - 2011.......................................................................................6
Sales/Revenue..........................................................................................................6
!e"t.......................................................................................................................6
Share rice.............................................................................................................. 6
Impact on VW Financials - 2012.......................................................................................7
Sales/Revenue..........................................................................................................7
!e"t.......................................................................................................................7
#ssets.....................................................................................................................7
Share rice.............................................................................................................. 7
Impact on VW Financials - 2013.......................................................................................8
Sales/Revenue..........................................................................................................8
!e"t.......................................................................................................................8
#ssets.....................................................................................................................8Share rice.............................................................................................................. 8
Impact on VW Financials - 2014.......................................................................................9
Sales/Revenue..........................................................................................................9
!e"t.......................................................................................................................9
#ssets.....................................................................................................................9
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Share rice.............................................................................................................. 9
PART C...................................................................................................................... 10
TRND ANALYSIS...................................................................................................... 10
$i%ui&it' Ratio #nal'sis............................................................................................ 11
Efficienc' Ratio #nal'sis...........................................................................................12
Solvenc' Ratio #nal'sis...........................................................................................13
(ar)et #nal'sis...................................................................................................... 14
CONCLUSION.......................................................................................................... 14
APPENDICES........................................................................................................... 16
#ppen&i* II + VW ,alance Sheet- Five ear .ren&..............................................................17
#ppen&i* III + VW ash Flo Statements- Five ear .ren&...................................................18
#ppen&i* IV+ VW Ratio .a"le- Five ear .ren&..................................................................19
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COMPANY OVRVIW
.he Vol)saen # VW is a erman multinational automotive manufacturin compan' ith
its hea&%uarters in Wolfs"ur5 erman'6 VW is one of the orl&7s lea&in automo"ile
manufacturers an& the larest carma)er in Europe6 It &esins5 manufactures an& &istri"utes
passener an& commercial vehicles5 motorc'cles5 enines5 an& tur"o machiner' an& offers
relate& services inclu&in financin5 leasin an& fleet manaement throuh it Financial Services
&ivision6 VW has appro*imatel' 340 su"si&iaries5 operates 118 pro&uction plants in 31 countries
an& sells its vehicles in 193 mar)ets6 VW has a orl&i&e staff of appro*imatel' 98259:; an&
pro&uces the secon& larest num"er of vehicles in the orl&6 VW is a pu"lic compan' an& has it
primar' listin on the Fran)furt Stoc) E*chane5 here it is a constituent of the Euro Sto**
90 stoc) mar)et in&e*5 an& secon&ar' listins on the $on&on Stoc) E*chane5 $u*em"our
Stoc) E*chane5
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PART A
VNTS IMPACTING VW FROM T! PRIOD 2010 TO 2014
$%&' () 2010
• E*pansionar' monetar' polic' an& recover' in emerin economies le& to a"ove-averae
roth of lo"al econom' "' 461? ith positive impact of VW main mar)ets+
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SalA"ur GS at a value of @363 "illion5 inclu&in the ac%uisition of automo"ile
operations of GS such as the holesale an& retail "usiness5 orsche Informati)5 orsche
,an)5 orsche Immo"ilien 5orsche Versicherun an& # (otors6 Hn&er the VW
roup5 GS retaine& its status as an in&epen&ent oraniAational unit an& continue& ith
its e*istin "usiness mo&el6 #ll assets remaine& intact6
• Fe"ruar' 29th 20115 Vol)saen # investe& @140m in an :61:? sta)e in the e%uit' of
S$ ar"on SE5 one of the orl&7s lea&in manufacturers of car"on fi"ers for the auto
in&ustr'6
$%&' () 2012
• #uust 1st
20125 VW purchase remainin sta)e in orsche e%ualin 100? of shares
ta)in full onership an& consoli&ation of orsche # into the VW roup6 VW "ecame
the parent compan' of orsche ith contri"ution in full of orsche SE7s operative
automotive "usiness5 primaril' consistin of the 9061? interest in orsche Gol&in
Stuttart m"G an& thus in&irectl' in orsche #6 .his as complete& for share-"ase&
an& cash consi&eration6
• Cul' 20125 VW throuh its #u&i ,ran& "ouht !ucati5 Italian motorc'cle manufacturer
for @:;0m6 VW also inherite& !ucati7s lia"ilities of appro*imatel' @200m
• (a' 9th 20125 VW issue su"or&inate& man&ator' converti"le notes ith an initial
volume @2 "illion6 .he tarete& procee&s of appro*imatel' 2 to 269 "illion euros from the
issuance of the man&ator' converti"le notes as inten&e& for the improvement of VW
capital "ase aainst the "ac)roun& of the creation of the interate& automotive roup
an& implementation of the strateic roth an& investment proram6
$%&' () 201*
• Canuar' 20135 Vol)saen "an) m"tt5 a 100? one& su"si&iar' of VW # sol& its
90? in&irect interest in $ease lan orporation
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• Cul' 2013 VW as iven approval "' the #( of (#< SE for its entr' into VW
commercial reister for the control an& profit an& lost transfer areement "eteen (#<
SE an& VW #6
$%&' () 2014
• Cune 20145 VW hel& 8869D? of Scania7s share capital6 .his correspon&e& to 886;;? of
the votin rihts6 Vol)saen initiate& a s%ueeAe-out for the remainin Scania shares6
• Cune 20145 to partiall' fun& the transaction of the Scania offer5 VW implemente& a capital
increase un&er hich ne preferre& shares ere issue& from authoriAe& capital aainst
cash contri"utions6 .his increase& the share capital "' a notional @2;6: million an&
enerate& ross procee&s totalin @260 "illion6
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PART "
IMPACT OF VNTS ON FINANCIAL STATMNTS
I+,-& (% VW F%-%-' 2010
S-$'/R$$%$
• Revenue increase& resultin from the recover' of the econom' an& the e*pansion of the
"usiness &ue to the ac%uisitions of shares in SuAu)i (otors an& inclusion of the Scania
su"si&iaries6
D$3&
• !e"t increase& from ac%uisition cost incurre& from SuAu)i an& I!6
A''$&'
• .otal current assets re from the impact of the share capital increase in #pril 20106
Goever current assets as neativel' affecte& "' cash an& cash e%uivalent outflos for
increase& lia"ilit' from the increase& cost of sales an& sellin an& a&ministrative
e*penses from the increase volume sales an& capitalise& cost from the ac%uisitions6
• oo&ill as positivel' affecte& from the ac%uisition of I!6
S-$ P$
• apital increase in #pril 2010 increases the num"er of preferre& shares6
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I+,-& (% VW F%-%-' 2011
S-$'/R$$%$
• Revenue increase& &ue to the inclusion of orsche Gol&ins SalA"ur5 (#< SE an& the
GS financial services "usiness from the financial services &ivision6
D$3&
• #n e*pense of @2;3 million as reconiAe& for SuAu)i an& @282 million for (#< from
the share of profits an& losses of e%uit'-accounte& investments in the fiscal inclu&in the
a&ustment of the e%uit' interest in SuAu)i (otor orporation an& (#< SE6
A''$&'
• urrent assets &ecline& as a result of the investment activit' an& capitalise& cost relate&
to the ac%uisitions as hich has sinificant cash outflo6
• #c%uisition an& investment in the financial assets of (#< SE an& the in&irect
ac%uisition of the tra&in "usiness of GS has &riven a sinificant increase in total assets6
S-$ P$
• Share price increase& sinificantl' in secon& %uarter an& mi&-'ear &riven "' VW positive
performance an& "usiness roth6 Wi&e fluctuation throuh the en& of the fiscal 'ear sa
the share price &ecline5 this &i& not have an' compan'-specific or fun&amental reasons5
"ut rather as larel' attri"uta"le to eneral uncertaint' on the financial mar)ets6
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I+,-& (% VW F%-%-' 2012
S-$'/R$$%$
• Revenue increase& primaril' attri"uta"le to hiher volumes an& the full consoli&ation of
orsche # #uust 15 20126
D$3&
• !e"t increase& from the cash outflos an& e%uit' use& in the full ac%uisition of orsche
an& the lia"ilities assume& &irectl' from the purchase of !ucati
A''$&'
• .otal non-current assets increase& "ecause of the a&&ition of orsche7s primar' assets an&
lia"ilities an& their re-measurement as part of purchase price allocation6
• .he issuance of the man&ator' converti"le note le& to a cash inflo an& the inclusion of
orsche inventor' "oth contri"ute& to positive impact on current assets6
• .he lia"ilities assume& &irectl' from the purchase of !ucati ha& a neative effect on
current assets6
• Intani"le assets increase& as a result of the oo&ill an& "ran& value of orsche6
• Investe& capital rose mainl' &ue to the full effect of the consoli&ation of orsche Gol&in
SalA"ur the consoli&ation of orsche in 20125
S-$ P$
• VW share price recor&e& sinificant increases in 20125 &ue larel' to the interation of
the automotive roup ith orsche in #uust 15 20126 .he issuance of the man&ator'
converti"le notes ha& minor impact on the share price6
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I+,-& (% VW F%-%-' 201*
S-$'/R$$%$
• Events in perio& have no impact on revenue
D$3&
• Event in perio& ha& no impact of !e"t
A''$&'
• #ssets ere positivel' impacte& from the purchase of 90? in&irect interest in $ease lan
orporation
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I+,-& (% VW F%-%-' 2014
S-$'/R$$%$
• Events &urin 2014 ha& no effect on revenue6
D$3&
• Event ha& no impact on &e"t an& e%uit' financin as use& for ac%uisition an& "usiness
e*pansion activities6
A''$&'
• #ssets ere positivel' impacte& from the capital increase implemente& to fun& the Scania
share purchase6 In a&&ition5 the increase& onership in Scania resulte& in increase& fi*e&
an& current assets6
• Increase in cash inflos from financin activit'5 h'"ri& notes place& in (arch 2014 an&
the capital increase implemente& in Cune 2014 "' issuin ne preferre& shares5 positivel'
impacte& current assets6
• Increase in the interest in Scania an& the s%ueeAe outJ resulte& in cash outflos ith
neative impact on current assets6
S-$ P$
apital increase an& the further ac%uisition of Scania shares positivel' affecte& the share price5
hoever the volatilit' of the mar)et cause& share price to &ecline to the en& of the 'ear6
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PART C
TRND ANALYSIS
P()&-3&
.his assesses the a"ilit' of VW to enerate earnins in comparison to its e*penses an& other
relevant cost incurre& &urin the specifie& perio&6
G('' P()& M-7% GPM9
( as relativel' constant ith averae 1? chane over the perio&6 Increase& net sales
resultin from recover' of the econom' an& ac%uisitions ere proportional to the
increase in e*penses6 #lthouh revenue ha& increase& over the perio&5 there as no
maor impact on its profits marin6
N$& P()& M-7% NPM9
#verae roth of 44? from 2010 to 2012 relate& to increase& revenue from recover' of
econom' an& "usiness e*pansion activities 6 Goever5
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from ac%uisition an& "usiness e*pansion hile net sales increase&6 !espite this5 VW B
is slihtl' hiher than the in&ustr' me&ian of 96086
R$&% (% C-,&- +,($ ROC9
RBE re in 2010 "ecause of the increase& net earnins &ue to the recover' of the econom'6
Goever5 "ecause of the sinificant capital outla' an& increase& lia"ilities in 2011-2012
for the ac%uisition of orsches5 !ucati an& e%uit' on (#< SE an& the 'et to "e realiAe&
earnin from these ac%uisitions in the short term5 the RBE tren&e& &onar&s6
R$&% (% ;& RO9
RBE ha& a stea&' incline from 2010 to 2012 ith the roth in net income attri"uta"le to
increase revenue from ac%uisition activities an& recover' of the econom'6 Goever5 in 2012
RBE &roppe& sharpl' as VW fun&e& its ac%uisitions5 strateic roth an& investment proram
"' issuin shares6 2014 sa a mo&est increase of 3? in&icatin the re&uction of investment
e*pen&iture6
L;& R-&( A%-''
.his anal'ses VW a"ilit' to pa' off its short-term &e"t o"liations6
Current Ratio and Acid Test
,oth current ratio an& aci& test ere hih in 2010 resultin from the positive effect of the capital
increase hich increase li%ui&it' in the perio&6 ,' 20115 there as a &ecrease in
li%ui&it' "ecause of ac%uisition activities an& relate& cash outflos6
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))$% R-&( A%-''
.his i&entifies ho effectivel'/efficientl' VW uses its resources or or)in capital to run the
"usiness6
R$$-3$ T%($
Receiva"le has "een consistent ith no fluctuation &espite the increase in sales over the perio&6
VW has stron cre&it policies an& manaement6
T(&- A''$&' T%($
#sset turnover rose in 2010 from the sinificant increase in sales &riven "' the recover' of the
econom'6 !espite the increase in assets in 20105 the increase sales offset the asset turnover6
.here as a minor &ecline from 2011 to 2014 "' an averae of 4? over the perio&5 as assets
continue to ro faster from the ac%uisition an& other e*pansion in comparison to the B sales
roth6
I%$%&( T%($
#lthouh sales increase& from the perio& 2010 to 20145 "ecause of the increase& stoc) from the
full consoli&ation orsche5 (#< S5 the Scania su"si&iaries5 inventor' increase at a faster rate
of sales thus the inventor' turnover tren&e& &onar& to 20146
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S($% R-&( A%-''
.he Solvenc' or earin anal'ses the financial position of VW6 It focuses on the sta"ilit' of the
"usiness an& e*posure to ris) an& ta)es into consi&eration the a' the "usiness is finance&6
D$3& &( ;&
!e"t to e%uit' rose "' 101? in 2010 from &e"t incurre& in the ac%uisition of Scania5 initial
interest in (#< an& orsche as ell as the apital Increase6 .he &e"t to e%uit' move&
&onar& from 2011 as less &e"t as use& to finance "usiness roth an& investment activities
as these ere fun&e& "' e%uit'6
I%&$$'& C($
Interest coverae &ecline& in 2011 correlatin to the &ecline in !e"t-to-E%uit' an& further
in&icatin that VW utiliAe& mostl' e%uit' to fun& its ac%uisitions from 2012 to 20146
D$3& &( A''$&'
!e"t to assets is relativel' constant ithstan&in the accumulation of assets6 .his suests that
the &e"t portion of VW financin portfolio is &ecreasin in&icatin that VW is usin more e%uit'than &e"t6
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RFRNCS
!'son5 C6 #ccountin for 6 >niht5 C6 ass5 C65 #n& Financial Intellience+ # (anaerKs ui&e to >noin Whatthe
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APPENDICES
A,,$%= I : VW I%(+$ S&-&$+$%& F$ Y$- T$%
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A,,$%= II : VW "--%$ S$$& F$ Y$- T$%
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A,,$%= III : VW C-' F(> S&-&$+$%&' F$ Y$- T$%
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A,,$%= IV: VW R-&( T-3$ F$ Y$- T$%
VW AG Ratios 2010 2011 2012 2013 2014
Profitability
Gross margin 16.9 17.6 18.2 18.1 18.0Net Profit Margin .7 9.9 11.! !.6 .
"#erating Profit Margin 0.0 7.1 6.0 .9 6.$
Ret%rn on &a#ital 'm#loye( )R"&'* 10.2 12.7 7.8 .7 .8
Ret%rn on '+%ity )R"'* 16.1 18.8 20.2 11.2 11.6
,i+%i(ity
&%rrent Ratio 1.1 1.0 1.1 1.0 1.0
-%i/ est Ratio 0.9 0.8 0.8 0.8 0.8
'ffiieny
Reeiable %rnoer 1.1 1.0 1.1 1.0 1.0
otal Assets %rnoer 0.0 0.7 0.7 0.6 0.6
nentory %rnoer 6.! .8 .6 .8 .2
3oleny4ebt to '+%ity 0.8 1.6 1. 1.1 1.2
4ebt to Assets 0.0 0.2 0.2 0.2 0.2
nterest &oer $.$ . 0.0 0.0 0.0
Mar/et Analysis53areol(er
P5' Ratio 7.2 !.9 . 10.6 8.2
4ii(en( Per 3are 0.$ 0.6 0.8 1.0 1.0
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